Ampal-American Israel Corporation: Ample Opportunity to Soar

What exactly does Ampal-American Israel Corporation (AMPL) do?

According to the company website:

An important objective of Ampal is to make investments in companies that grow in Israel initially and then expanded abroad. As a general guideline, Ampal seeks to acquire and maintain a sufficient interest in a company to permit it, on its own or with investment partners, to have a significant influence in the management and operation of that company. In determining whether to acquire an interest in a specific company, Ampal considers quality of management, return on investment, growth potential, projected cash flow, investment size and financing and reputable investment partners.

Ampal then goes on to describe its investment style and focus:

Our style is to invest opportunistically in undervalued assets with an emphasis on the following sectors: energy, real estate and project development and leisure. We believe that our past experience, current opportunities and deep understanding of the above-named sectors both domestically and internationally will allow us to bring high returns to our shareholders. Ampal emphasizes long-term appreciation over short-term return.

I assume that these goals are the ones that have been in place ever since Joseph (Yossi) Maiman took over the controlling interest in this veteran company, which was originally established in 1942 by the Histadrut (General Federation of Labor in Israel) to raise funding from U.S. Jewry for economic projects in Israel. Ampal has had a bumpy ride since reaching all-time high of $26 in 2000. It reached a low of $1.90 in the first quarter of 2003 and has since shown an improvement, but its stated claim of bringing high returns to its shareholders is not a strong one. It has just published its financial report for 2006 and the fourth quarter of 2005, and these do not point to any good developments at the company. In fact, last year Ampal's stock was the worst of the three Israeli investment companies traded in New York.

Ampal's stock does, however, hold genuine potential, especially in its oil and real estate businesses, but the market has ignored it largely because it is a pretty boring stock. There are no interesting figures because Maiman's control is so absolute, and the word has it that anyone who joins up with Maiman cannot benefit. Why? It's unclear to me.

Why I am mentioning Ampal? Firstly because no one else has, and second, it is still a brand name in the U.S., and that is something that can be exploited. The question is whether anyone wants to build on the reputation or not.

AMPL 1-yr chart

Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.